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Vonage Holdings Corp (NYSE:VG)
Beneish M-Score
-3.02 (As of Today)

The zones of discrimination for M-Score is as such:

An M-Score of less than -2.22 suggests that the company is not an accounting manipulator.
An M-Score of greater than -2.22 signals that the company is likely an accounting manipulator.

Vonage Holdings Corp has a M-score of -3.02 suggests that the company is not a manipulator.

VG' s Beneish M-Score Range Over the Past 10 Years
Min: -5.34   Max: 0.99
Current: -3.02

-5.34
0.99

During the past 13 years, the highest Beneish M-Score of Vonage Holdings Corp was 0.99. The lowest was -5.34. And the median was -3.01.


Definition

The M-score was created by Professor Messod Beneish. Instead of measuring the bankruptcy risk (Z-Score) or business trend (F-Score), M-score can be used to detect the risk of earnings manipulation. This is the original research paper on M-score.

The M-Score Variables:

The M-score of Vonage Holdings Corp for today is based on a combination of the following eight different indices:

M=-4.84+0.92 * DSRI+0.528 * GMI+0.404 * AQI+0.892 * SGI+0.115 * DEPI
=-4.84+0.92 * 1.0118+0.528 * 0.9848+0.404 * 1.0801+0.892 * 1.0162+0.115 * 0.9595
-0.172 * SGAI+4.679 * TATA-0.327 * LVGI
-0.172 * 1.0071+4.679 * -0.1125-0.327 * 1.1849
=-3.02

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

This Year (Sep15) TTM:Last Year (Sep14) TTM:
Accounts Receivable was $22.7 Mil.
Revenue was 223.36 + 221.858 + 219.73 + 214.632 = $879.6 Mil.
Gross Profit was 147.961 + 149.432 + 148.687 + 148.995 = $595.1 Mil.
Total Current Assets was $144.1 Mil.
Total Assets was $795.7 Mil.
Property, Plant and Equipment(Net PPE) was $48.1 Mil.
Depreciation, Depletion and Amortization(DDA) was $58.3 Mil.
Selling, General & Admin. Expense(SGA) was $478.3 Mil.
Total Current Liabilities was $178.1 Mil.
Long-Term Debt was $233.5 Mil.
Net Income was 3.433 + 8.347 + 7.469 + 5.604 = $24.9 Mil.
Non Operating Income was -0.05 + 0.032 + -0.577 + -0.01 = $-0.6 Mil.
Cash Flow from Operations was 37.665 + 35.237 + 10.724 + 31.309 = $114.9 Mil.
Accounts Receivable was $22.0 Mil.
Revenue was 214.71 + 218.878 + 220.733 + 211.22 = $865.5 Mil.
Gross Profit was 149.03 + 150.486 + 151.574 + 125.56 = $576.7 Mil.
Total Current Assets was $132.7 Mil.
Total Assets was $592.6 Mil.
Property, Plant and Equipment(Net PPE) was $43.8 Mil.
Depreciation, Depletion and Amortization(DDA) was $48.6 Mil.
Selling, General & Admin. Expense(SGA) was $467.3 Mil.
Total Current Liabilities was $176.1 Mil.
Long-Term Debt was $82.7 Mil.



1. DSRI = Days Sales in Receivables Index

Measured as the ratio of days’ sales in receivables in year t to year t-1.

A large increase in DSR could be indicative of revenue inflation.

DSRI=(Receivables_t / Revenue_t) / (Receivables_t-1 / Revenue_t-1)
=(22.669 / 879.58) / (22.048 / 865.541)
=0.02577253 / 0.02547309
=1.0118

2. GMI = Gross Margin Index

Measured as the ratio of gross margin in year t-1 to gross margin in year t.

Gross margin has deteriorated when this index is above 1. A firm with poorer prospects is more likely to manipulate earnings.

GMI=GrossMargin_t-1 / GrossMargin_t
=(GrossProfit_t-1 / Revenue_t-1) / (GrossProfit_t / Revenue_t)
=(149.432 / 865.541) / (147.961 / 879.58)
=0.66623072 / 0.67654449
=0.9848

3. AQI = Asset Quality Index

AQI is the ratio of asset quality in year t to year t-1.

Asset quality is measured as the ratio of non-current assets other than plant, property and equipment to total assets.

AQI=(1 - (CurrentAssets_t + PPE_t) / TotalAssets_t) / (1 - (CurrentAssets_t-1 + PPE_t-1) / TotalAssets_t-1)
=(1 - (144.135 + 48.063) / 795.661) / (1 - (132.724 + 43.771) / 592.637)
=0.75844235 / 0.702187
=1.0801

4. SGI = Sales Growth Index

Ratio of sales in year t to sales in year t-1.

Sales growth is not itself a measure of manipulation. However, growth companies are likely to find themselves under pressure to manipulate in order to keep up appearances.

SGI=Sales_t / Sales_t-1
=Revenue_t / Revenue_t-1
=879.58 / 865.541
=1.0162

5. DEPI = Depreciation Index

Measured as the ratio of the rate of depreciation in year t-1 to the corresponding rate in year t.

DEPI greater than 1 indicates that assets are being depreciated at a slower rate. This suggests that the firm might be revising useful asset life assumptions upwards, or adopting a new method that is income friendly.

DEPI=(Depreciation_t-1 / (Depreciaton_t-1 + PPE_t-1)) / (Depreciation_t / (Depreciaton_t + PPE_t))
=(48.57 / (48.57 + 43.771)) / (58.309 / (58.309 + 48.063))
=0.52598521 / 0.54816117
=0.9595

6. SGAI = Sales, General and Administrative expenses Index

The ratio of SGA expenses in year t relative to year t-1.

SGA expenses index > 1 means that the company is becoming less efficient in generate sales.

SGAI=(SGA_t / Sales_t) / (SGA_t-1 /Sales_t-1)
=(478.265 / 879.58) / (467.336 / 865.541)
=0.54374247 / 0.53993514
=1.0071

7. LVGI = Leverage Index

The ratio of total debt to total assets in year t relative to yeat t-1.

An LVGI > 1 indicates an increase$sgai= in leverage

LVGI=((LTD_t + CurrentLiabilities_t) / TotalAssets_t) / ((LTD_t-1 + CurrentLiabilities_t-1) / TotalAssets_t-1)
=((233.515 + 178.149) / 795.661) / ((82.732 + 176.051) / 592.637)
=0.51738617 / 0.43666359
=1.1849

8. TATA = Total Accruals to Total Assets

Total accruals calculated as the change in working capital accounts other than cash less depreciation.

TATA=(IncomefromContinuingOperations_t - CashFlowsfromOperations_t) / TotalAssets_t
=(NetIncome_t - NonOperatingIncome_t - CashFlowsfromOperations_t) / TotalAssets_t
=(24.853 - -0.605 - 114.935) / 795.661
=-0.1125

An M-Score of less than -2.22 suggests that the company will not be a manipulator. An M-Score of greater than -2.22 signals that the company is likely to be a manipulator.

Vonage Holdings Corp has a M-score of -3.02 suggests that the company will not be a manipulator.


Related Terms

Altman Z-Score, Piotroski F-Score, Accounts Receivable, Revenue, Gross Profit, Total Current Assets, Total Assets, Property, Plant and Equipment, Depreciation, Depletion and Amortization, Selling, General & Admin. Expense, Total Current Liabilities, Long-Term Debt, Net Income, Non Operating Income, Cash Flow from Operations


Historical Data

* All numbers are in millions except for per share data and ratio. All numbers are in their own currency.

Vonage Holdings Corp Annual Data

Dec05Dec06Dec07Dec08Dec09Dec10Dec11Dec12Dec13Dec14
DSRI 1.10840.89120.80990.86121.01481.19451.17150.98570.8735
GMI 1.0160.84320.950.97221.02740.97150.99981.01850.9679
AQI 0.83673.2811.49660.98070.61972.9950.90571.13381.1156
SGI 2.25631.36361.08680.98770.99550.98340.97560.97641.0481
DEPI 0.59820.64170.76760.89210.92341.13870.99360.86940.8027
SGAI 0.71040.8570.68150.90440.891.02121.06211.04861.026
LVGI 0.7811.43771.12750.99851.28070.31630.87971.15231.0363
TATA -0.19730.0081-0.1108-0.112-0.56640.4862-0.152-0.0931-0.107
M-score -2.17-1.54-2.94-3.16-5.340.99-3.07-2.96-3.06

Vonage Holdings Corp Quarterly Data

Jun13Sep13Dec13Mar14Jun14Sep14Dec14Mar15Jun15Sep15
DSRI 1.24171.00360.98570.94720.91030.96580.87351.04821.12051.0118
GMI 0.9810.97971.01851.03011.03631.03960.96790.96940.97280.9848
AQI 0.91910.96831.13381.23251.23451.16841.11561.02651.05391.0801
SGI 0.97110.9770.97640.99811.02351.04091.04811.03241.01891.0162
DEPI 0.99460.8220.86940.79050.72980.8690.80270.85620.90390.9595
SGAI 1.05591.07741.04861.04421.00540.94821.0260.99720.99081.0071
LVGI 0.98631.04081.15231.04711.04511.07931.03631.11141.08151.1849
TATA -0.1119-0.1413-0.0931-0.1139-0.1269-0.1334-0.107-0.1035-0.1136-0.1125
M-score -2.86-3.23-2.96-3.00-3.07-3.04-3.06-2.95-2.91-3.02
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